Car insurers have enjoyed a £7 billion windfall in the last four years – and official figures suggest this has come despite rising serious and fatal accidents.

That is the conclusion of a leading law firm, Thompsons Solicitors, having analysed the publicly-available government and insurance industry data for claims costs, premium revenue and road accidents.

The figures accompanying this release show that from 2010 to 2014:

  • Insurers have made an aggregate saving on claims costs of £6.68 billion
  • Motorists have paid £353 million more in premiums
  • Annual claims costs have decreased by 29%
  • The number of road accidents a year has decreased by 5%
  • Serious and fatal accidents have increased each year by just under 1%
  • The number of claims registered was 4.7% lower in 2014-15 than in 2010-11

“The figures are deeply concerning because they suggest the insurers have been saving billions and yet increasing premiums. Those who have benefitted from this windfall have not been hard pressed motorists but shareholders,” said Tom Jones, head of policy at Thompsons Solicitors.

“The government says it is introducing small claims reforms because claims volumes are ‘historically high’ when in fact - in complete contrast to their assertions - the statistics show that the number of claims registered has actually fallen in line with road accidents by about five per cent since 2010.

“The big change that jumps out from the data is that the insurers have paid out £6.68 billion less in claims over the period – this not only makes nonsense of the assertion there’s a fraud ‘pandemic’ but it also – given the accident and claim numbers are only 5% down – suggests the insurers have been paying much less per claim.

“It’s possible that lower claims costs per accident reflect lesser injuries and more minor vehicle damage, but this doesn’t fit with the increase in serious and fatal accidents. It looks like the insurers are getting better at avoiding paying compensation that should be paid. The time period covers from when the last personal injury claims reforms were introduced by the coalition government and the coincidence of that seems too great.

“What is clear is that the savings made have not been passed onto policy holders - in fact, the insurers have collected £353 million more in premiums during the period despite pocketing these massive savings.

“What this looks like is honest motorists – the overwhelming majority even by the government’s distorted figures – have lost out both ways: they have been paying high premiums but the compensation being paid out if they have an accident is down.

“The government should not be allowed to get away with plans to tip the balance further in the insurers favour by depriving accident victims of the right to free legal representation without producing some credible evidence that has been submitted to independent scrutiny to support their arguments.”